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JUSTICE DEPARTMENT ANNOUNCES SETTLEMENT

WASHINGTON, DC Catholic Healthcare West (CHW), a San Francisco-based health care provider that operates hospitals in California, Arizona, and Nevada, has agreed to pay the United States $10,750,000 to settle claims that four hospitals that it owns unlawfully charged federal health care programs for surgical procedures using experimental cardiac devices, the Justice Department announced today.

The devices had not been approved for marketing by the Food and Drug Administration (FDA) at the time the procedures were performed between 1987 and 1994. The United States maintained that four CHW hospitals violated the False Claims Act by seeking federal reimbursement for services when they knew that Medicare and TRICARE, the military health care program, considered the procedures to be non-reimbursable. The four hospitals are: Sequoia Hospital in Redwood City, California; Seton Medical Center in Daly City, California; Mercy General Hospital in Sacramento, California; and St. Joseph's Hospital and Medical Center in Phoenix, Arizona.

The government had previously entered into settlements with other hospitals engaged in similar conduct. These other settlements resulted in payments of roughly $18 million.

"Taxpayer-funded health insurers have a right and a duty to set responsible limits on the goods and services they will pay for," said Acting Assistant Attorney General Stuart Schiffer. "The hospitals in this case disregarded clear government coverage limitations in order to bill federal health care programs for procedures that they knew were not reimbursable. The Justice Department intends to pursue other hospitals that have engaged in the same conduct."

The settlement announced today stems from a qui tam or whistleblower lawsuit filed by Kevin Cosens, a former medical device salesman. Under the False Claims Act, private citizens can bring suit on behalf of the government and share in any awards that are obtained through that legal action. Mr. Cosens will receive $2,150,000.

The government's investigation was conducted by the Civil Division of the Department of Justice; the United States Attorney's Offices in the Northern District of California and the Western District of Washington; and the Office of Inspector General of the Department of Health and Human Services.

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